Own a Commercial Building or Residential Rental Property?

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An Engineering Cost Segregation Study is a detailed analysis conducted by engineers or other qualified professionals to identify and reclassify components of a commercial property for tax purposes. The primary objective of a cost segregation study is to accelerate depreciation deductions, thereby reducing current income tax liabilities and improving cash flow for property owners.

In the United States, commercial property owners typically depreciate their properties over a lengthy period (e.g., 39 years for non-residential real property) according to the Modified Accelerated Cost Recovery System (MACRS). However, certain components within a building, such as HVAC equipment, interior improvements, or certain building elements, may have shorter depreciation periods.

A cost segregation study involves a thorough examination of a property to identify these shorter-lived assets. Engineers evaluate construction drawings, conduct on-site inspections, and analyze relevant cost data. The study then provides a breakdown of the property's assets, reclassifying certain components into categories with shorter depreciation lives.

By accelerating depreciation on these shorter-lived components, property owners can take larger deductions in the earlier years of ownership. This can lead to substantial tax savings and improved cash flow, making it a valuable strategy for optimizing the financial performance of commercial real estate investments. 

To receive a no-cost property analysis illustrating the estimated tax savings and increased cash flow your property would create from a cost segregation study, please provide the following information:

• Facility Type / Property Location
• Acquisition Date
• Building / Improvements Cost (excluding land)
• Current Year Depreciation Schedule